Income Taxes

6 Months Ended

Jul. 03, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

In the three months ended July 3, 2022, our income tax provision of $3.2 million on a loss from continuing operations before income taxes of $38.5 million, was primarily due to changes in the forecasted annual effective tax rate, partially offset by a decrease in the deferred tax liability due to mark-to-market unrealized losses on equity investments. Our income tax provision of $3.6 million in the three months ended July 4, 2021 on an income from continuing operations before income taxes of $90.7 million was primarily due the deferred tax liability on mark-to-market unrealized gains on equity investments.

In the six months ended July 3, 2022, our income tax benefit of $8.4 million on a loss from continuing operations before income taxes of $52.6 million, was primarily due to the reversal of deferred taxes previously accrued for California as a result of the enactment of Senate Bill 113 which restored the ability to utilize net operating losses in 2022. Our income tax benefit of $1.5 million in the six months ended July 4, 2021 on an income from continuing operations before income taxes of $37.8 million was primarily due to windfall benefits from stock-based compensation deduction and the true-up of estimated state tax liability, partially offset by deferred tax liability on mark-to-market unrealized gains on equity investments.

During the three and six months ended July 3, 2022, in accordance with FASB guidance for interim reporting of income tax, we have computed our provision for income taxes based on a projected annual effective tax rate. Estimates of the annual effective tax rate at the end of interim periods are, of necessity, based on evaluations of possible future events and transactions and may be subject to subsequent refinement or revision. The income tax differs from the amounts computed by applying the statutory income tax rate to the loss from continuing operations before income tax primarily as a result of our valuation allowance and discrete items recorded during the quarters.

In the three and six months ended July 3, 2022, our income tax benefit of $0.2 million and $0.6 million on a loss from discontinued operations before income taxes of $20.9 million and $47.2 million respectively, was primarily due to the state tax benefit of year-to-date operating losses of the C&I Solutions business. In the three and six months ended July 4, 2021, our income tax benefit of $1.2 million and $1.3 million on a loss from discontinued operations before income taxes of $13.5 million and $15.4 million was also due to the state tax benefit of year-to-date operating losses.

The sale of the C&I Solutions business to TotalEnergies Renewables resulted in a taxable gain in the quarter ended July 3, 2022. The tax impact of $1.4 million was recorded in “additional paid-in capital” within our condensed consolidated statements of equity, consistent with the accounting treatment of the gain and tax accounting guidance.

Total liabilities associated with uncertain tax positions were $15.4 million and $14.7 million as of July 3, 2022 and January 2, 2022, respectively. The increase of $0.7 million was primarily due to incremental accrual of interest and penalties on existing reserves and foreign exchange rate changes for non-U.S. liabilities.